Property insurance vs. household insurance. While this is something many first-time homeowners debate, it’s not really an either-or question. This is because property insurance is part of your home insurance policy.
What Is Property Insurance?
Property insurance is a broad term in the insurance industry. It is used to describe all of these protections that cover a homeowner’s property—things like your home, car, motorcycle, or personal belongings. Whether you live in a house, apartment or condo, you need property insurance.
Accident Insurance
To better understand property insurance, it’s important to understand another broad industry term: casualty insurance. It is completely different from property insurance in that it provides you with liability coverage. It helps protect you if you are found legally responsible for an accident that causes injury to others or if you damage another person’s property.
Companies must also have accident insurance. For example, if someone comes into your store and slips and falls, your business will be covered by a commercial general liability policy.
Together, these two broad areas of insurance are commonly referred to as P&C, which stands for Property and Casualty. You may have heard this term before.
Mortgage Insurance
While we’re discussing what home insurance isn’t, let’s take a quick look at mortgage insurance. Mortgage insurance protects your mortgage lender in the event that you are unable to repay your loan. The cost of mortgage insurance is usually included in the mortgage payments.
It is important to note that mortgage insurance is completely separate from home insurance. Mortgage insurance does not cover you, your home or your property in any way – only your bank.
What Is Home Insurance?
Home insurance is a more specific term than property and casualty insurance. It provides you with financial protection in the event of damage to your home or personal property due to a catastrophic event such as fire, wind or theft. Here is a list of the coverages that make up a standard homeowner’s insurance policy:
Dwelling – Also known as Coverage A, Dwelling protects against damage to the physical structure of the home. Because of this, it is coverage used to repair or rebuild your home if it is damaged by fire, storm or other event covered by your policy.
Other Structures – Also known as Coverage B, Other Structures covers structures on your property that are separate from the main building. Examples include garages, fences and sheds. Your coverage level with Other Buildings is usually 10% of Dwelling coverage.
Personal Property – Also known as Coverage C, Personal Property covers items inside your home. Televisions, computers, furniture, clothing, and some jewelry are examples of personal property protected by this coverage.
Loss of Use – Also known as D coverage, loss of use protects you if you are forced to leave your home during repairs. It reimburses you for temporary accommodation, food and other related expenses. This coverage is usually 20% of your home coverage.
Personal Liability – Also known as Coverage E. Personal Liability provides protection if you are found liable for property damage or injuries to others. It can help pay for legal fees, medical bills and other costs.
Medical Payments – Medical Payments, also known as Cover F, protects you if a guest is injured on your property. It will take care of the medical bills whether you were found liable for their injuries or not.
What Else Do I Need?
For many homeowners, standard home insurance is more than enough. However, you may still want additional protection. Flood insurance, earthquake insurance and umbrella insurance are other layers of protection to consider.
Flood Insurance
Standard home insurance does not cover flood damage. You will need to purchase separate flood insurance for this level of protection.
Flood insurance protects your home and property from damage caused by rising water as a result of a flood. The cause can be heavy rain, melting snow or coastal storms, among others. By comparison, standard home insurance only covers interior water damage. Examples include a burst pipe or water leaking through the roof after prolonged rain.
Earthquake Insurance
Similar to flood insurance, earthquake insurance is also a separate policy from your homeowner’s policy. If an earthquake strikes, it will cover repairs to your home, damage to your personal property, debris removal costs, and any other living expenses you may incur while repairing or remodeling your home. Needless to say, if you live in an area that is prone to earthquakes, you should strongly consider purchasing earthquake insurance.
Umbrella Insurance
Umbrella insurance is a separate policy that increases your liability limits. This extra financial protection will help you if the unexpected happens. For example, if someone is injured on your property or you cause damage to someone else’s property, umbrella insurance will protect you.
How Do I Insure Valuables?
High-value items such as jewelry, furs, and collectibles are protected under personal property coverage only up to a certain dollar limit. If you want to buy more coverage, you can either plan each item separately or buy a broader blanket coverage.
Planned Personal Property
The best way to protect valuable items such as jewelry or collectibles is to individually plan each item. This requires you to tell the insurance company in advance about each item and what you paid for it.
Let’s say you own a lot of expensive jewelry. It would be in your best interest to plan each piece in advance. That way, if they are damaged in a fire, your carrier already knows the jewelry you own, the years it was purchased, and so on. This will make the claim handling process much smoother.
Blanket Cover
Comprehensive coverage is an endorsement that covers multiple pieces of property in the same category, such as jewellery, fine art or silver. With this type of cover, you don’t need to provide details of each piece of property in advance. For example, you can simply tell your carrier, “I want $10,000 in jewelry blanket coverage.”
While this type of coverage may be easier to purchase in advance, the claims process is usually slower if a loss occurs. This is because your insurance carrier will ask you to prove that you had these items.
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The above content is for general informational purposes only and does not supersede or alter any provisions, limitations or exclusions contained in any insurance policy.
